NIO Inc. (NIO.SI) shares plunged 3.26% in pre-market trading on Friday, following the announcement of a significant share placement and amid ongoing concerns about the company's financial performance. The Chinese electric vehicle maker's stock price decline reflects growing investor unease about the company's capital-raising strategy and near-term prospects.
On Thursday, NIO announced the pricing of its upsized HK$4.03 billion (US$518.3 million) offering of 136.8 million Class A ordinary shares at HK$29.46 each. The placement price represents a nearly 10% discount to the stock's latest closing price on the Hong Kong Stock Exchange, signaling the company's urgency to secure additional funding. NIO plans to use the proceeds for research and development of smart electric vehicle technologies, strengthening its balance sheet, and general corporate purposes.
The share placement comes on the heels of NIO's disappointing fourth-quarter results and weak first-quarter outlook, which were reported just a week ago. The company missed both revenue and delivery targets for Q4, and its projected deliveries for Q1 2025 fall significantly short of analyst expectations. This combination of factors has intensified concerns about NIO's growth trajectory and cash burn rate, leading to increased selling pressure on the stock.